Tokyo District Court’s Room 104 is a large, high-ceilinged vault which has witnessed the unravelling of some of the country’s most complex corporate scandals. Over the past four months, it has been dominated by a man who isn’t even there.
Carlos Ghosn, the former Nissan chairman who fled from Tokyo to a home and university position in Lebanon over a year ago, has escaped trial in Japan. That ordeal falls instead to his former right-hand man, Greg Kelly, who, for want of the same outsized music box and ex-Green Beret exfiltration squad that helped Mr Ghosn escape, has been in court since September. There he has fought charges of helping mastermind an $88m understatement of his former boss’s pay. Conviction could in theory see the American lawyer jailed for 15 years. The outlook for Nissan and its alliance with France’s Renault is not much more cheerful.
Four months into Mr Kelly’s Ghosnless trial, it has become plain how the prosecutors, working with the plea bargains of key figures and the co-operation (and sometimes dramatic appearances) of senior Nissan executives, intend to use the absent bogeyman.
Mr Ghosn, whose domineering character as a business leader has been fleshed out with every witness statement, has been cast as a greedy, irresistible corporate tyrant. His demands, in this narrative, were never to be questioned; the executives on the receiving end of them, according to what they themselves said in court, wore their compliance as millstones. Mr Kelly is fighting as the proxy for an absent dictator made to loom menacingly over Room 104.
The tyrant-depicting strategy makes sense, but comes with a double risk. For the prosecutors, the danger — more obvious with each new witness from Nissan’s ranks — is that their selection of Mr Kelly as the sole non-Ghosn arrestee looks political. In their descriptions of assiduous or fearful service to a dictator, Nissan executives have, at the very least, admitted knowledge of the pay-concealing mechanism now under the microscope. Their freedom from prosecution jars with how seriously the court is being asked to take the very existence of the scheme and its corruption of corporate morality.
But arguably the greater risk is to Nissan’s efforts to make an unambiguous success of its post-Ghosn era. Since Mr Ghosn’s and Mr Kelly’s arrests in 2018, the Japanese carmaker’s governance standards and failure to place checks on its once-superstar leader were always going to be savaged. But the in-court strategy is now creating and committing to the public record a forensic account of just how dysfunctional that governance was. It might not be so bad were it not that Mr Ghosn rescued Nissan from oblivion and indisputably led the company into a golden era. But the more the Ghosn-era top echelons of Nissan decry him, the more they seem to suggest that the company, by nature, requires a dictator to succeed. By implication, it is also at sea without one.
Last week’s court appearance of Hari Nada, the whistleblower and former head of legal affairs, added two important dimensions to that problem. While Mr Ghosn may have provided Nissan with the tyrant it now lacks, the trial of Mr Kelly worryingly confirms that the former boss’s diplomacy and skill disguised how fundamentally unbalanced the Renault-Nissan alliance was.
Mr Ghosn’s motive for the pay-concealing scheme, alleged Mr Nada (but disputed by Mr Ghosn), was driven by a fear that if the true scale of his pay were revealed under disclosure rules introduced in 2010, that would play fatally with Nissan’s partner and 43 per cent shareholder, Renault. That fear was amplified, said Mr Nada, by concern that closer scrutiny of his financial affairs would arise from the Renault and Nissan alliance’s steady advance towards a merger. Mr Nada’s explanation reinforces the sense at Nissan that Mr Ghosn, in scrambling to hide from Renault what he was making from Nissan, had been able to profit more from the Japanese side of the alliance than from the French. That Japanese sense of resentment still sours the relationship.
The more that the complex machinations of Messrs Ghosn and Kelly are described in Room 104, the more is revealed about how dependent the whole structure was upon the energy, wiles and alleged subterfuge of its Brazilian-Lebanese supremo. It might work as a prosecutorial strategy. But neither Nissan nor Renault benefits from the idea that these qualities also guaranteed the smooth running of an alliance upon which they both still depend.